Video 4:06
Racehorses outpaced by GFC

Horse prices at Sydney's annual yearling sale are down 30 per cent on pre GFC levels, but local punters are still ready to gamble on the next champion.

Transcript

WHITNEY FITZSIMMONS, PRESENTER: Well, they might turn out to be some of the best racehorses in the world but right now they can't outrun the effects of the global financial crisis.

Prices at the annual yearling sale in Sydney are down 30 per cent on pre-GFC levels.

Many international buyers have stayed away, scared off by the high Australian dollar and a lack of funds.

But there's still no shortage of local punters willing to gamble hundreds of thousands of dollars on the slim chance they may pick up the next champion.

Michael Troy reports.

MICHAEL TROY, REPORTER: For leading New Zealand thoroughbred breeder Mark Chittick, there is a nervous but very quick wait to see if three years' work has paid off.

AUCTIONEER: ..at $110,000 all done. Step, you've done it again!

MICHAEL TROY: There was only one bidder but in the horse industry, buyers and sellers know each other and the horses very well.

GRAEME ROGERSON, TRAINER: We valued the horse. He is by a young stallion that I think is really going places, probably doesn't reflect on the sale, but we thought he was value for money and we thought we might have to go a bit more.

MICHAEL TROY: With many breeders settling for less than expected at least the New Zealanders had the currency in their favour.

MARK CHITTICK, WAIKATO STUD, NZ: At the end of the day, the money we end up with in the pool, we take it back to New Zealand and get a 30 per cent advantage so we've got to be pretty happy.

TONY MILLARD, HONG KONG TRAINER: This year's very tough. I can say, especially coming from Hong Kong, with your Australian dollar so strong, our budgets have really decreased and we aren't able to get onto the type of horses which we would like.

MICHAEL TROY: The no shows are unusual as the Inglis Easter Yearling Sale is considered a must-attend event.

MARK WEBSTER, MD, INGLIS BLOODSTOCK: This is the number one thoroughbred sale in the Southern Hemisphere. It is an annual sale of thoroughbred yearlings that are being offered to buyers from all over the world.

MICHAEL TROY: The top sale was on the first day with a Redoute's Choice colt fetching $1.9 million, while the headlines went to the first filly produced by three-time Melbourne Cup winner Makybe Diva, who sold for $1.2 million.

AUCTIONEER: She's very well put together, charming individual here...

MICHAEL TROY: The average price per yearling is around $230,000, compared to $380,000 two years ago.

MARK WEBSTER: We've got taken a drop, there's no doubt about that. The thoroughbred industry is not immune to what has been happening around the world.

MICHAEL TROY: Overall, sales are down seven per cent from last year, with around 80 per cent of horses selling as the market adjusts to the tougher conditions.

AUCTIONEER: Done. All done. No, I'm sorry, there's just a little more again required. We'll just have to stand her aside.

MARK WEBSTER: Although some of the major buyers such as buyers from the Middle East, Sheik Muhammed, and others, aren't spending as much this year, it has been positive that there are other local buyers have taken up the slack.

DANNY O'BRIEN, TRAINER: There are still some high priced horses out there but there's not nearly as many of them and certainly the market does fall away. There's a lot more bargains there for the buyers than there were. We can certainly afford to be a lot more fussy than what we were a couple of years ago.

MICHAEL TROY: Syndicates are still a popular way to invest but usually around the $100,000 mark.

DANNY O'BRIEN: People that just get bitten by it. They love it, they're passionate about it and they keep coming back for more even when their bank balance probably says they shouldn't.

MICHAEL TROY: The professional breeders have little choice but to take some losses.

The marketplace is still well down from the heights of two years ago as breeders come to terms with the fact that they paid stallion fees near the top end of the market and now their yearling sales are near the bottom.

ANTONY THOMPSON, CHAIRMAN, AUSHORSE: Three years ago when these matings were done, they were on the back of a lot of confidence in the marketplace. We'd seen incredible growth in our industry over the last 10 years. This downturn will find a few people a bit short but I think on the whole, the level we're at now is much more sustainable.

MICHAEL TROY: But, as in every horse race, there is always a winner.

GRAEME ROGERSON: I think there's a lot of bargains on the market today, but this time next year ask me and I'll tell you which ones were the bargains.